Tight Management still as important as ever

MEDIA RELEASE
Monday, 16 November 2009

For immediate release

Tight Management still as important as ever

Sound management decisions are as important as ever if farmers want to maximise the gains from the increased Fonterra forecast payout, according to DairyNZ.

“Profit provides options for dairy farmers but profitability doesn’t usually happen by accident,” says DairyNZ Tight Management campaign leader Rob Brazendale.

“The Tight Management campaign aims to ensure farmers improve profitability and the principles are relevant regardless of whether the payout is high or low.”

The campaign focuses on having a high level of financial awareness, good cost control, timely decision making, a high utilisation of pasture and a focus on cost-effective systems.

“Fonterra’s announced increase in payout is a huge boost to the industry and will mean that most dairy farmers will now have a cash surplus,” says Rob. “This will allow many farmers to repay some debt or retain some cash to buffer less favourable years.

“Tight Management farms will continue to focus on cost-effective production and optimise farm profitability. These farmers have done an excellent job of controlling their costs in the first half of the year and are well placed to generate strong profit results. Financial disciplines will remain in place and emphasis will continueᾠaround maximising the amount of pasture eaten.

Rob advises farmers to first capture the cash then make it work for you. “The average level of indebtedness of New Zealand dairy farmers is approximately $20/kgMS. This means on average around a quarter of this year’s milk payout will be used to service debt through interest payments. However, reducing principle will decrease interest expenditure in future years.

“We are very grateful to our Tight Management farmers who are allowing their local farming community to share and scrutinise their financial planning and farm management decisions, as well as the support of a number of other industry partners. DairyNZ would particularly like to acknowledge the financial support for Tight Managemenῴ events in Ngatea, Central Plateau, Hawkes Bay, Northern Wairarapa and Southern Wairarapa by MAF Policy, as part of MAF™s contribution to drought recovery assistance in these regions.

For those farmers not already involved in the Tight Management campaign it is not too late. Get involved by:

• Attending your local Tight Management Farm events
• Registering to receive the regular email update from your local Tight Management Farm at www.dairynz.co.nz/tightmanagement
• Using the information to make the best possible decisions on-farm this season.

ENDS

© Scoop Media